1) Create a household budget.
Instead of creating a budget based on what you like to spend on, use receipts to create a budget that reflects your actual spending habits over past months.

This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

2) Reduce your debt.
Lenders generally look for a total debt load of a certain percentage of income. This figure includes your mortgage. So you need to get monthly payments on the rest of your installment debt — car loans, student loans, and revolving balances on credit cards — down to a lower percentage of your net monthly income.

3) Look for ways to save.
You probably know how much you spend on rent and utilities, but little expenses add up, too.

Try writing down everything you spend for one month. You’ll probably spot some great ways to save, whether it’s cutting down on that morning trip to Starbucks or having homecooked food more often.

4) Increase your income.
Now is the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income to a level high enough to qualify for the home you want.

5) Save for a down payment.
Designate a certain amount of money each month to put away in your savings account.

6) Keep your job.
While you don’t need to be in the same job forever to qualify for a home loan, having a reasonably stable job will put you in good credit standing.

7) Establish a good credit history.
Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.